Best for Britain Brexit-Reports-6.12.17-FINAL

industry relies on exporting goods for sale and importing parts for manufacturing, which often
pass through several countries before they get to the UK. Under WTO rules, a customary 10%
tariff would apply to all our car exports and a 4% tariff on car parts. 32 With the average car
being made up of 30,000 different parts and 41% of parts being imported, a 4% tariff would
cause the cost of production to rise quickly. 33 Analysis conducted by Society of Motor
Manufacturers and Traders (SMMT) suggests tariffs on cars alone could add at least £2.7 billion
annually to imports and £1.8 billion to exports. 34
‘No deal’ would also hamper the UK’s ability to trade cars globally since the EU negotiates all
Free Trade Agreements (FTA) for the EU28 collectively. By virtue of its EU membership, the UK
benefits from 68 FTAs which on exit day would no longer apply. The Vehicle Certification
Agency (VCA)’s approval, allowing UK-produced cars to be sold across the EU, would also no
longer be valid. 35 Currently, all cars produced in the UK are tested and certified by the VCA.
Finally, leaving the EU without a deal, or crashing out, would also end freedom of movement
between the UK and the EU. This would prevent the automotive industry from retaining their
competitive hiring practices. With freedom of movement, UK car companies can give equal
opportunities to skilled workers from 28 different countries. Currently, 10% of UK automotive
industry employees are from the EU27. The end of freedom of movement between the UK and
the EU would cause a skills gap crisis for the sector. This is already being seen with 5,000 jobs
presently vacant. 36
Effects already being felt
Pound deprecation because of Brexit and the knock on effects of inflation have killed consumer
purchasing power. The car industry is already suffering the direct effects of this with a sevenmonth
market slump and the lowest sales for four years. 37 Foreign investment in the car industry
has also taken a hit due to lack of confidence and uncertainty. The first six months of 2017 saw
foreign investment reduced by £322 million pounds, in comparison to £1.66 billion invested in
2016 and £2.5 billion in 2015. 38
Due to uncertainty, lack of progress with the negotiations and the high costs of ‘no deal’, car
companies are already making contingency plans. Ford, the global automotive company, has
already warned operations may have to stop in the UK if ‘the UK is not competitive’ after
Brexit. 39 Key manufacturing sites like Ford Bridgend have already seen the 2,100 workers seek
strike action over investment cuts and fears about the plant's future. 40 Ford has taken a huge hit
since the referendum, with losses of $86 million in 2017 in comparison to profits of $138 million
in 2016, which they say are “nearly completely explained by Brexit effects.” 41 The most recent
automotive company to speak out saying they may have to stop producing cars in the UK was
Aston Martin, who currently manufactures all their cars in the UK. This would put 2,500 jobs at
risk in the UK and harm a UK luxury car industry worth £3.6 billion. 42
‘No deal’ Brexit will significantly harm the UK’s key automotive industry. Big car
companies are already threatening to leave the UK and jobs are at risk. This is
not best for Britain.
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